Tobacco plays hardball with Md. Industry bets on GOP and gets tough with states

April 21, 1996|By Peter H. Stone

ON FEB. 5, Geoffrey Bible, CEO of Philip Morris Cos. Inc., chaired a little-noticed dinner for the Republican Governors Association in Washington that smashed records by raking in $2.6 million. At the gala, which Philip Morris underwrote to the tune of about $100,000, Mr. Bible spoke passionately to the governors about tobacco's benefits to the economy. Both Philip Morris and R.J. Reynolds are members of RGA's elite board, each chipping in about $40,000 annually to the group's campaign coffers.

Big Tobacco is now betting its future heavily on the Republican Party. Last year, tobacco companies gave the GOP an unprecedented $2.4 million in "soft" dollars. In fact, the top two soft money contributors to the GOP in 1995 were none other than Philip Morris ($975,149) and RJR Nabisco ($696,450). Similarly, tobacco industry PACs gave $841,120 to Republican members of Congress, about twice the $422,221 they gave in 1993.

While these numbers are dramatic, they are more or less out in the open. Meanwhile, the tobacco industry's aggressive political lobbying on the state level has gone largely unnoticed:

In Maryland, tobacco industry lawyers met with the state attorney general's office about 15 months ago in an effort to stop the state from filing suit against the industry to recover Medicaid costs incurred for treating smoking-related illnesses. At that meeting, which was attended by Keith Teel, a partner at Covington & Burling, the Washington law firm that represents the biggest tobacco companies, the tobacco lawyers played hardball, according to an assistant Maryland attorney general who was present:

"It was bare knuckles, Teel ran the meeting. He said, 'If you do this, you'll have more lawyers coming at you than you'd ever want.' "

According to the attorney, Mr. Teel threatened to depose every Medicaid recipient in the state. To make his point, Mr. Teel brought along lawyers from three of the state's biggest firms. One of them, according to the assistant attorney general, blurted out, "No one's kidding themselves that nicotine's not addictive." Mr. Teel quickly interrupted, explaining, "Of course, it's the industry's position that nicotine's not addictive."

In a second meeting last summer, Mr. Teel, accompanied by Andrew Miller, the former attorney general of Virginia and now a partner at Dickstein, Shapiro & Morin in Washington, argued against such a suit on more substantive grounds. Despite the industry's legal blitz, Maryland is planning to file a suit against the tobacco industry shortly.

Efforts to reach Mr. Teel to discuss the meeting with Maryland officials were unsuccessful.

Maryland is one of several states, including Louisiana, Texas and Massachusetts, where Mr. Teel and Mr. Miller have worked in tandem to kill suits against the industry. To date, seven states have filed such suits seeking to recoup about $10 billion in Medicaid expenses plus billions more in punitive damages.

Meeting with state attorneys in Boston, the legal team warned that "it would take scores and scores of state employees" to handle the legal discovery if Massachusetts went ahead with a suit, according to one of the state's lawyers. Massachusetts filed a suit last December and this year Louisiana and Texas also filed suits.

Richard Blumenthal, the Connecticut attorney general who is considering filing a similar suit, said that in general the industry has worked hard to quash opposition: "The tobacco industry is not in the least bit reluctant to express itself directly or indirectly to law enforcement officials it regards as foes. There have been repeated contacts with me and other attorneys general to deter us from efforts the industry regards as hostile. They've varied in degrees of antagonism and overtness."

Philip Morris' February bash for the Republican governors was not an isolated incident: The tobacco industry has gone all out to enlist governors -- especially Republicans -- in its fights. Last November, at the annual RGA meeting in Nashua, N.H., tobacco lobbyists were out in force, according to a North Dakota official who attended the event. The lobbyists were trying to get governors to send letters to the FDA arguing against the agency's proposed regulation of tobacco on states' rights grounds.